As the cost of motoring continues to rise, drivers are increasingly sacrificing essential insurance add-ons and breakdown services to manage rising vehicle running costs. While the majority of drivers still opt for Fully Comprehensive policies (77%), the research suggests many are under-insured by omission. Significant numbers of motorists are now driving without financial buffers for common road mishaps, with only 31% holding key cover and a mere 16% protected against tyre damage or punctures.
The data indicates that drivers are treating their policies like building blocks - retaining the base layer but stripping away the extras that traditionally provided peace of mind, but also bring additional cost. For example, fewer than half of drivers now carry Personal Accident cover (48%) or Legal Expenses cover (44%).
Nearly one in five (18%) motorists have also either cancelled or reduced their breakdown cover to save money. Despite the prevalence of car financing, only 15% of drivers have Guaranteed Asset Protection (GAP) insurance, leaving them vulnerable to significant debt if their vehicle is declared a total loss.
In a bid to avoid high interest rates associated with monthly installments, 61% of motorists are now paying their insurance premiums and road tax in a single annual lump sum. While this provides a long-term saving, it could place a significant immediate strain on household liquid cash.
John Cassidy, Managing Director of Close Brothers Motor Finance, commented: “It’s clear that motorists are really feeling the pressure of rising costs, and are exploring all avenues to cut back on spending wherever they can.
“While avoiding some insurance add-ons may save money, it does also expose many drivers to significant risk - especially with factors such as gap insurance. Unfortunately, Government policies such as the September rise in fuel duty, and proposed schemes such as the EV pay-per-mile tax continue to place a financial burden on consumers, forcing them to cut corners and leave themselves potentially vulnerable as a result. Working with a dealer to understand all finance options available may present a more efficient way for drivers to understand and manage costs on a monthly basis, making it easier to budget and protect against any sudden price increases.”
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